Apparently in defence procurement there's no such thing as a fait accompli. It looked like the AWD deal was going to be the usual stich-up... then a minor Spanish Inquisition seems to have upset the apple-cart.

Here's how the US State Department perceives the whole thing:

"In December 2003, Australia announced its decision to participate in the U.S. Missile Defense program. Subsequently, the U.S. and Australia signed in July 2004, a Framework Memorandum of Understanding on Missile Defense Cooperation, and a Research & Development MoU was signed in October 2005. Three specific cooperative projects -- involving the Over-the-Horizon Radar, modeling and simulation, and fusion and tracking technologies -- are currently under discussion. On August 16, 2005, Canberra announced it had chosen the U.S. firm Gibbs and Cox as the preferred designer for their navy's air warfare destroyers worth up to $6Billion Australian Dollars. Three vessels are currently funded, with the first scheduled to be operational in 2013. Each will be equipped with AEGIS sensors and will be interoperable with the military forces of the United States and with those of other future coalition partners. Although Australia may not currently see a ballistic missile threat to its territory, its purpose for pursuing bilateral U.S.-Australia Missile Defense cooperation is based on maintaining a close alliance relationship with the United States and providing Australian industry with an opportunity for industrial cooperation and technology transfer."

- Paula A. DeSutter, Assistant Secretary for Verification, Compliance, and Implementation
Remarks at the National Defense University Foundation Congressional Breakfast Seminar Series. Available at http://www.state.gov/t/vci/rls/rm/64126.htm

Washington, DC
April 4, 2006

 

Two years after South Australia and Victoria "competed" to win the job of constructing Australia's (and perhaps other counties) contribution to the Bush Administration's Missile Shield, we finally know what we're going to be building. Suprisingly, its a Spanish ship instead of an American one.

Well the actual ship is.. the technology that makes it so effective is to be installed by the Pentagon's favourite defence companies.

Pic the Navantia F100

 

It wasn't long after Premier Rann attempted to claim a personal success in "winning" the contracts ("Mission Accomplished," he told u) in mid-2005, that the Centre For Asai Pacific Studies released a report by Richard Bitzinger on missile defence cooperation with the United States. It explained how Japan agreed to purchase AEGIS systems for a ship-based missile system. Japan would integrate the systems with existing and new ships, and until it was ready US warships would provide Shield coverage. The also explained how Australia had agreed to participate in the Shield by extending the range of its Jindalee Over-the horizon Radar Network (JORN) to enable it to detect incoming missiles. Australia, the report stated, had not signed on to participate in active missile defence.

Today, Australia still hasn't signed on, though the rumblings that we might be buying the Aegis SM-3 missiles needed to participate are becoming more frequent and louder.

U.S. shipbuliding firm, Gibbs and Cox, according to Defense Industry Daily,Gibbs & Cox were the lead ship designers for the DDG 51 Arleigh Burke-Class AEGIS Destroyer, "the first destroyer with the AEGIS system and currently the main air defense and missile strike platform in the US Navy.

Under a picture of an Airleigh Burke ship, the company has been posting this job ad from it's website:

"G&C is looking for naval industry professionals to join our winning team. Our current project portfolio includes every major shipbuilding program in the U.S. Navy, as well being selected as the Preferred Designer for the Commonwealth of Australia’s Air Warfare Destroyer program."

Defense Industry Daily also reported in 2005 that G'nC "beat out Germany's Blohm + Voss and Spain's Navantia to join a team made up of ship builder ASC Shipbuilder Pty Ltd and combat system engineer Raytheon Australia."

I get the impression that they thought themselves as a "shoe-in", overseeing the implementation of their own design. Having already beat Navantia to the role of design co-ordinator... surely they wouldn't be overseeing an Arleigh Burke?... the rest of the job might have been regarded as "in the can."

The only variable in the program was the procurement system set up by Halliburton Australia's Malcolm Kinnaird. How could it go wrong?

[Defence Material Organisation extract]

"In accordance with the 2003 Kinnaird Review, the AWD Program will be undertaking parallel design activities during Phase 2. Gibbs & Cox, Inc. was selected in August 2005 to undertake the development of the Evolved Design, while Navantia’s F100 Frigate in service with the Spanish Navy, was announced as the Existing Design in May 2005. Both Design options will be considered by the Government at Second Pass in the second half of 2007, at which time a choice of the Preferred Design will be made."

A little while later, Hallurton/KBR's Vice President for the Asia Pacific region, Andrew Fletcher, moved to head Techport Australia, the company that would co-ordinate the warships small-to-medium contracts. Anyone at " G'n'C' would surely by now be thinking "Game, Set and Match."

Not So.

In spite of the Howard Government's preferences, the D.M.O. eventually decided that the Spanish design was better value for money, despite the fact that it could shoot less missiles and had one less helipad. It could handle AEGIS. Nothing else really seems to be important.

The Australian Strategic Policy Institute, at the deathknock hour of the deal, whacked out a paper in support of G'n'C. Howard has decided to ignore "his" political think-tank and act on the Australian Defence Force's Recommendations.

The clue i should've picked up on was in the announcement by Lockheed-Martin in March this year about it's new Aegis contract. The U.S. Navy ordered four packages. One for the Spanish, three for us. The Spanish Navy has already proven it can use the AEGIS system in its warships, and would be unlikely to build a Gibbs'n'Cox when they can do it themselves.

Former Defence Minister Hill seemed quite keen to help Lockheed-Martin save money. He explained in December 2005 that ""Placing the order for the systems now allows the United States to continue manufacturing the systems for Australia without halting its production line bringing about greater efficiency and achieving considerable savings." Hill is now the Australian ambassador to the United Nations.

Although Lookheed went to painstaking lengths to explain that its work would fit both proposed Australian ship designs, it would make sense if everyone had the same systems on the same ships, wouldn't it.? Certainly it would be more cost-effective for Lockheed.

As for Raytheon, they don't seem to give a damn who they're dealing with. Hill's shipbuilding and the designing announcement were handled with remarkably near-identical media releases In both instances the names of the contract-winning companies were the only changes to the Raytheon's Australian manager's responding remarks.

A couple of weeks back Defence Minister Nelson announced an expansion of the ASC so that it handle submarine orders from Asian buyers. Adelaide Advertiser that "Dr Nelson would not name the countries interested in buying submarines but said the list definitely did not include Iran." He didn't mention that Taiwan, on the other hand, is looking for six more subs.

The ASC is due to be sold next year. "Local companies" BAE and KBR have experience in ship (and sub) construction in the UK. When KBR left the UK's Devonport dockyards recently, BAE was attempting to take it over with the help of everybody's friends, Carlyle.

I wonder who'll be sniffing around to buy this "choc-full o' conracts" defence construction firm?